Digital transformation and innovation will change the face of insurance according to a new report from Swiss Re’s research arm.
Sigma has issued a new study which says the digital revolution will empower consumers to be more informed and independent than ever before and equips insurers with the tools to cater to customers’ current and future needs.
The report, “Data-driven insurance: ready for the next frontier?” adds while consumer-supplier touchpoints will become predominantly digital, human interaction will continue to play a role: through consumer feedback and analysis, insurers will be able to identify where in-person engagement is most effective.
“Innovation will continue to transform the insurance industry“, says Thierry Léger, (pic) Chief Executive Officer of Swiss Re Life Capital. “Changing risk environments, shifts in customer attitudes and accelerating advances in technology will be the key drivers of the next few years. We will need to leverage insights from our data and partnerships to upgrade our business practices.”
The report adds to date, insurers in emerging markets lead the way in optimising the potential offered by digitalisation, as in many of these markets, the starting point is digital rather than analogue.
“The availability of internet-enabled devices and universal connectivity has changed consumer behaviours and expectations, particularly among younger generations,” it states. “Empowered with digitally-facilitated information, consumers expect rapid access to information, transparency, and more personalised purchase experiences relevant to their lifestyles.”
“As a result of digitalisation, insurers now have direct connection to their customers“, says Jeffrey Bohn, Chief Research & Innovation Officer at Swiss Re Institute. “With the availability of granular data, insurers can better segment customers enabling them to develop new tailored products & services and refine existing ones in real time. This benefits customers and insurers alike.”
“With the growing granularity of insights into customer behaviours, the role of insurance is evolving from indemnification of losses to a broader consultative service on risk prevention and mitigation covering both private and commercial clients’ changing needs over time,” adds Swiss Re. “For example, digital data sources signal changes in an individual’s life circumstances such as marriage, a new home or job. In response, insurers can direct personalised guidance to the client on predictive and prescriptive next-step risk mitigation actions.
“The direct relationship with customers will evolve as new touchpoints and channels become normalised, and back-office processes like marketing/sales, underwriting and claims administration are increasingly automated. To complement the efficiencies of digitalisation, insurers will be able to make most effective use of the insights and target human engagement to circumstances where consumers expect empathetic response, such as a health crisis or death in the family. The personal touch in sensitive areas will bring a human face to insurance.”
The report adds that regulation will play an important role in supporting the integration of new technology and data into insurance business across different jurisdictions.
“In monetising the potential of digitalisation, insurers will need to manage local data protection and privacy requirements. Longer-term, successful insurers will be those that can leverage insights from their investments and partnerships in data and analytics and develop compelling risk protection solutions aligned with evolving regulations,” it explains.